CONNECTED HOME MEETS TARGETING:  Of all the audio streamers Pandora has benefited the most of the surge in Connected Home listening over the past 24 months.  Over 10M of Pandora’s MAUs listen on at least one connected device in their home, and they’re listening for an astounding three hours per day on average.  With this kind of scale comes the ability to overlay data segmentation across the Connected Home platform.  As described in the attached AdWeek link, brands can now buy any of Pandora’s 2,000+ proprietary audience segments for audio ads running on Connected Home devices.  Since many of these devices don’t have a screen and are voice-activated, audio is the perfect native ad unit to capture listeners’ attention.  Bottom line . . . there’s more in-home listening than ever before, and brands now have more ways to use audience data to reach these listeners.  Seems like a positive step forward all around!

iHEART IN THE SPIN ZONE:  Yesterday iHeart held it’s Q3 Earnings Call.  Their biggest headline was 18 straight quarters of revenue growth on a barely positive .03% growth in Q3’17 vs. Q3’16.  Keep in mind this growth now includes trade which they treat as ad revenue, so the more trade they do the more “growth” they achieve.  I decided to go a little deeper into iHeart’s earnings results to get a better picture of the financial health of the company.  According to the attached RBR link iHeart’s total debt inched up to $20.6B, thanks to a net loss in Q3 of $248M.  Think about that for a minute.  At current pace iHeart is losing almost a billion dollars a year, which is causing the company to sink further and further into debt.  Perhaps the most striking financial number to consider is cash on hand.  On Jan 1 iHeart had $845M in cash, but now that amount has shrunk to $286M.  At the current burn rate iHeart will run out of cash sometime in the middle of Q1.  And since it’s unlikely that they’ll be able to borrow more money (would you like to be the last creditor to get paid in a $20B line?), bankruptcy could be realistic in Q1.  Suddenly that trade-fueled .3% growth doesn’t seem too exciting, right?

DOING PROGRAMMATIC THE WRONG WAY:  Earlier this year Snapchat announced it was launching a self-service API portal for clients to buy programmatic ads on the platform.  This seemed like a logical way to scale thousands of new advertisers at once and help Snap compete against the big boys like Facebook and Google.  But it turns out there was an unintended consequence to this move – the commoditization of Snap’s inventory into low cost, non-targeted ROS impressions.  According to the attached Digiday link, Snap’s lack of audience data (which is needed to create audience segs) means most impressions bought programmatically are selling the $3-8 cpm range.  By comparison two years ago Snap was famous for only selling high-end “takeover” style ads for $750K+.  So in an effort to bring more clients to the party Snap has inadvertently gutted the specialness of its platform, and transformed from a premium environment to one that’s barely better than an ad network.  And programmatic was the knife used to perform this unnecessary surgery.  Goes to show you that programmatic unto itself isn’t necessarily a good thing.  It needs to be combined with data to create valuable audience segs which command a premium price to help drive the overall business forward.

Have a great Thursday guys!

GOOGLE GETTING INTO SHAZAM’S KITCHEN:  You knew it was just a matter of time before voice-rec AI technology became widespread enough that Shazam’s secret sauce would be up for grabs.  And not surprisingly, Google is the first copycat to roll out its new song-recognition software on Pixel smartphones and Android devices.  As described in the attached RAIN link, your Google powered device can now respond with artist and title information when you ask “What song is this?”  And if you want to play the song or watch the video (surprise!) you’ll be redirected to Google Play Music or YouTube, so Google keeps the entire content experience in house.  While I don’t see this as a game-changer for Google it’s a significant problem for Shazam who no longer holds song recognition technology as it’s unique selling proposition.  Expect Apple, Amazon and others to follow with similar capabilities sooner than later.

FACEBOOK MAKES IT AN EVEN DOZEN MEASUREMENT ERRORS:  You probably remember the self-reported errors Facebook began to disclose last Fall around measurement metrics and billing miscalculations.  Well guess what . . . it’s still happening.  As early as yesterday FB announced the discovery of two new errors, according to the attached Marketingland article.  The latest two errors involve video ad units which are only supposed to render while in view.  These ads automatically play once loaded, as long as they’re in view on the screen.  The benefit of this ad unit is obvious, because advertisers are guaranteed to have their impressions viewed.  But FB’s system didn’t stop the ads from playing once a user had scrolled down the page, which effectively backgrounded the unit.  However clients were still billed for the videos even though they weren’t seen.  FB isn’t disclosing the total number of videos that rendered in error, but they’ve announced credits to advertisers who paid for $5,000+ of the flawed units.  As I’ve said before, I’ll give FB credit for raising its hand and admitting an error once they know about it.  But you get the feeling the flaws in their tech stack are like cockroaches – you see a few here or there, but you know many more are waiting just out of sight.

EVERYBODY’S BECOMING A BANKER:  Finally today, let’s go on a Fin-Tech journey together.  First it was Paypal and Venmo encroaching on traditional banks with mobile cash transfer and payment systems.  Then the banks countered with their own mobile pay solutions such as bank-specific platforms like ChasePay and industry-wide platforms like Zelle.  Now Apple is trying to nose into the cash transfer game with the launch of Apple Pay Cash.  As explained in the attached TechCrunch link, users of Apple’s iMessenger app will now be able to send money back and forth instantly.  The transaction requires users to have an ApplePay account set up – so if you send cash it will be billed to your ApplePay account, and if you receive cash it will show as a credit.  This is just another example of a large tech company who already controls the communication infrastructure working its way into new service categories.  The traditional banks should be nervous about this one.

Have a great Wednesday guys!

AMAZON’S MULTIPLIER EFFECT:  Here’s a stat to get your morning started.  In 2017 Amazon will transact 43% of all Ecommerce sales in the US, compared to 37% in 2016.  So Amazon’s slice of the pie is growing, while the Ecommerce pie itself continues to grow.  With this growth comes an interesting multiplier effect, which allows Amazon to vertically integrate its business and compete outside its traditional swim lane.  As noted in the attached Inc.com article, Amazon is beginning to lay the ground work for its own distribution system – because why pay Fedex or UPS to ship your goods and make a profit when you can just in-house it?  To give you an idea of how big of an opportunity this is, consider that Amazon makes up 10% of UPS’s shipping volume today.  You’d hate to be the UPS rep who loses that renewal deal.  Or what about Amazon’s new Business Prime B2B platform which allows manufacturers to sell directly to consumers while cutting out the middle man.  If you’re Sysco you might suddenly have a new competitor on your hands.  These are just a few examples of the transformation which may come from Amazon’s dominance of an entire distribution system.  Remember when these guys were just selling books online?!?

OF POLITICS AND PIZZA:  We all know the power successful sports sponsorships can have to create a brand’s identity and drive sales.  But can a sports affiliation also drag you down?  That appears to be happening, or is at least the excuse given, for Papa John’s sales decline.  PJ’s sales were down in Q3 and the stock dropped 13%.  According to the attached AdAge link, founder John Schnatter is assigning blame for the decline squarely on the NFL’s national anthem controversy.  He pulled no punches on their earnings call by saying, “The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction.”  Unless you’ve lived under a rock for the past decade you’ve seen Mr. Schnatter starring in NFL-themed ads with football legend Peyton Manning.  Together the pair helped drive up PJ’s sales thanks to the high profile of the league.  Now it appears there might be a downside to this type of association.  Because if something goes poorly for the player, team or even the league a sponsoring brand could be exposed.  It’s also worth noting that Schnatter was a donor to the Trump campaign, so there could be a little bit of personal politics involved in his assessment of the situation.  Either way PJ’s sales are down, the NFL isn’t happy, and Peyton Manning now has some free time to make more Nationwide ads.

RISE OF THE PARENNIALS:  When I say the word Millennial the image that comes to mind is usually of a goatee-donning barista named Ethan at your nearest high end coffee shop.  Of course that’s a stereotype.  The reality is Millennials are a diverse group who’s rapidly aging up into adulthood.  Consider the fact that there are 16M Millennial moms in the US right now.  This group, referred as Parennials, has a unique set of priorities and family dynamics which are unlike their parents or grandparents.  The idea of Dad going to work and Mom watching the kids is out, and co-parenting is in.  Since Millennials aren’t on as stable an economic footing as previous generations they’re more likely to have a parent directly involved in their household operations – either by watching the kids during the day or even helping to pay the rent/mortgage.  Parennials are less likely to own a home and are less likely to have a religious affiliation, but are way more likely to use Social media for peer interaction.  The NY Times has a solid profile of this group in the attached link.  It’s important for marketers to get to know the specific tastes and trends of Parennials.  We’ve known how big the baby sector has been for decades, and now it’s the Parannials turn to be the ones making the purchase decisions.

Have a great Tuesday guys!

THE POT CALLING THE KETTLE “LEGACY”:  Did you ever think you’d see one of the Big Four TV Networks calling out someone else as being too attached to its legacy business?  That’s exactly what happened during an interview on Friday with Linda Yaccarino, NBCUniversal’s head of sales, as described in the attached Business Insider link.  Ms. Yaccarino called out the agency Holding Companies for being slow to adopt programmatic buying from the TV Networks because they’re trying to preserve their incumbent buying structure.  Yaccarino’s complaint comes from the slowness of agencies to take advantage of NBCU’s newly-released data platform and programmatic buying tools.  On a certain level this seems ironic since the TV networks benefit most from old school media buying.  But if you play this forward a few years it’s probably a savvy move.  Because if the entire media buying universe shifts to programmatic, legacy players like NBC could get left behind if they don’t transform now.  The other thing this example teaches is that you can be seen as more cutting edge just by saying the other guy isn’t keeping up with the times.

THE IMPORTANCE OF ADS.TXT:  This past May the IAB launched a transparency initiative in digital media called ads.txt.  The concept is a simple text file that’s included within each publisher’s digital profile, which lists the names of all the third party networks/exchanges who are authorized to sell that site’s inventory.  Brands can check to make sure the 3^rd party they’re buying a publisher’s impressions through appear on the list to make sure the seller is legit.  In theory ads.txt should cut down on fraudulent “site spoofing” sales where an unauthorized broker claims they’re selling a premium publisher’s inventory but then burns the impressions on a dummy site and pockets the purchase price.  Although ads.txt adoption by publishers initially got off to a slow start things are now picking up speed.  According to the attached Digiday link, 44% of the top 10,000 publishers now have ads.txt disclosures in their profiles.  I’m guessing this will get up close to 100% within the 12 months, since it’s hard to think of a valid reason not to implement ads.txt.  Such an easy an effective way to clean up our industry.

GETTING INTO THE DETAILS ON RUSSIAN POLITICAL ADS:  It’s official . . . Hillary Clinton is the devil!  At least that’s the comparison being drawn in the Facebook ad (image below), which was purchased by Russian operatives during last year’s Presidential campaign.  This example and dozens more like it were released by the House Intelligence Committee last week, as summarized in the attached Business Insider link.  While the subject matter of the ads vary, the one common denominator is the goal of spreading divisiveness (one group against another) ahead of last November’s election.  The ads are generally pro-Republican/Trump, but there was also a Black Panther themed ad posted by a group going by the name “Blacktivist”, so it seems like the inflaming was happening across party lines.  These ads ran across many of the major Search and Social players, including FB, Google, YouTube, Twitter, etc..  These publishers have vowed to release targeting data behind specific ads which will allow us to connect the dots on who Russia was attempting to influence with specific creative messages.

Have a great Monday guys!

CLEANING UP THE DEFINITION OF IMPRESSION DELIVERY:  Apologies for going deep AdTech on a Friday morning, but there’s a small but important change happening in digital media measurement.  First let me set up the problem.  Over the past few years inconsistencies have started to crop up over the definition of serving a digital impression.  Should publishers get delivery credit for fetching the ad, serving the ad, or when the ad renders?  Right now every agency, tracking vendor and publisher has their own answer to that question, which creates a messy situation when trying to reconcile impression totals and viewability percentages on campaigns.  To address this issue the MRC has proposed a change to the definition of impression delivery, by taking the word “served” out and replacing it with the term “count-on-begin-to-render” (which is a geeky way of saying when the ad begins to appear on the user’s device).  If this is confusing MediaPost has a solid breakdown in the attached link.  I know this may seem like techie minutia, but standardizing the way impression delivery is counted is way overdue for the entire digital media industry.

TECH HARDWARE TAKES ON RETAIL SOFTGOODS:  Of all the predictions eMarketer makes about purchase trends during the upcoming holiday season in the attached link, the most interesting observation is also the least expected.  Could the launch of the iPhone X actually drag down “soft goods” sales in Q4?  Soft goods are things like clothing, bedding, home décor, etc., compared to hard goods which are TVs, refrigerators, etc..  Soft good are generally considered a “want” and not a “need”.  For instance, you may want that new cashmere sweater but you absolutely need a new fridge if your current one breaks down.  Since Want items are discretionary if something else comes along which you want more, like say the new iPhone X, you’ll reprioritize your purchase decision.  And since the X is very expensive ($999), eMarketer estimates that $30B of discretionary spending could be absorbed by Apple this holiday season.  Who ever thought the humble sweater maker would find themselves in competition with Apple?

IT’S TIME TO GET THAT CYBER SECURITY DEGREE:  Yesterday Facebook announced another stellar quarter of user growth and revenue performance during its Q3 earnings call.  But the most interesting comments CEO Mark Zuckerberg made were around the challenges of site security and FB’s planned expansion in cybersecurity, as explained in the attached AdExchanger link.  According to Zuck FB plans to have 20,000 full time cybersecurity-related employees hired by the end of 2018.  For context right now they have roughly 23,000 employees total – so 14 months from now almost half of FB’s employee jobs will be based on protecting the platform?!?  Granted FB has a wide array of security challenges, which include everything from guarding users’ data, to blocking Russian hackers from buying ads to hijack our elections, to terrorist groups uploading nefarious content.  Just the idea of that stat is a sign of the times in an increasingly dangerous online world.

Have a great Friday (and weekend) guys!

TaaS IS COMING TO YOUR DRIVEWAY:  Over the last few months I’ve written extensively about the transformation of the Automotive industry from a legacy  of selling cars to a future of selling mobility through TaaS (Transportation as a Service).  Whether it be autonomous driving cars, driving subscriptions, or rideshare platforms, how we get from point A to point B is going to look much different twenty years from now compared to today.  As part of its Digital Transformation series co-authored by Accenture Interactive, AdWeek is featuring a fascinating article on the role MarTech will play in the future of transportation.  From the AI needed for self-driving cars, to the in-car content we’ll consume (because we’re not driving anymore), to data advancements which will make the path to purchase more efficient than ever, digital technology will have as much impact on transportation in the 21^st century as Henry Ford had on the past century.  Get versed in this stuff now, because TaaS is coming.

RADIO MARRIAGE:  Last Fall Entercom and CBS Radio announced plans to merge into one larger broadcast company.  Since then snail-paced progress has been made on the merger.  Now it looks like we may have a finish line in sight, as reported in the attached RAIN link.  The pair have received DOJ approval on a plan to divest stations in several markets where they’ll exceed the FCC ownership cap, and are expected to consummate their marriage on or around November 17^th.  This is worth noting because the tie-up will create the 2^nd largest radio broadcaster in terms of revenue, and the 3^rd largest from a station count perspective – behind iHeart and Cumulus.  But there’s one important difference about Entercom/CBS that separates it from the other two –  they won’t be saddled with an insurmountable debt which will lead to inevitable bankruptcy.  So maybe they’ll have a fighting chance to succeed.

RADIO DEFAULT:  Speaking of bankruptcy . . . yesterday Cumulus announced that it was not making a scheduled $24M interest payment this week.  This sets up the timetable for a possible bankruptcy.  According to the attached RadioInk link Cumulus’s failure to make this week’s interest payment has started a 30-day countdown clock.  Within this period they can renegotiate debt terms with their lenders (hopefully for a more favorable interest rate), or go into formal default.  If default happens the lender whose interest payment was missed can demand an entire repayment of their note, which will trigger the bankruptcy.  So this is either the beginning of the end for Cumulus as we know it, or a very daring game of chicken to restructure its debt.  Fasten your seat belts.

Have a great Thursday guys!

ADWEEK’S TOP DIGITAL STATS:  AdWeek is out with another roundup of the Top Digital Stats from the past week in the attached link.  It’s a pretty ho hum list, except for one jaw dropping stat in #2.  AdWeek sourced a Deloitte study when it said “consumers are expected to spend 55% of their shopping budgets online this year.”  I reread that sentence and still couldn’t believe it.  So then I went online and downloaded the study for myself – attached  here (Deloitte Holiday 2017).  Then I isolated the questionable stat in the image below.  It turns out that 55% of consumers plan to make holiday purchases online, which is a big difference from consumers planning to spend 55% of their budgets online.  It’s sort of like the classic “let’s eat Grandma” vs. “let’s eat, Grandma” mistake.  Once that was cleared up in my mind the data made a lot more sense.  Regardless of the error, it’s important to understand how Ecommerce is transforming traditional holiday shopping for the majority of us.

THE GAME IS CHANGING ON THE AGENCY HCs:  Yesterday WPP announced its Q3 earnings, and it was pretty rough sledding for the world’s largest agency holding company and its CEO Sir Martin Sorrell.  Total global rev was flat YoY, which was below investor expectations, and WPP lowered their future revenue outlook for the third time this year.  Mr. Sorrell was pressed on two fronts about the disappointing results.  The first question was whether or not business consultancies like Deloitte, PwC, etc. are eating into agency business.  Sir Martin responded with a no (so far), citing the fact that just 1% of traditional agency work is being done by consultancies.  Then he was asked if the aggregation of media spending on Google and Facebook was hurting WPP, since clients were more likely to work directly with digital publishers.  Mr. Sorrell also said no to this, but then a Twitter post of WPP’s own data started to circulate (image below) showing an amazing shift in the top 10 media owners from five years ago to today.  This paints the picture of a new world order across the media-scape which the HCs still need to figure out.

MEDIA BUYER REDOUX:  The lowly media buyer position has become a commodity at most agencies, since this is the roll most likely to be squeezed out thanks to programmatic automation.  But not every agency is reducing/eliminating buyer positions.  In the attached AdExchanger interview Chris Nicholson, the Chief Media Officer at VaynerMedia, said they’re hiring more media buyers than ever for a newly imagined position.  First difference – today’s media buyers are trained in programmatic transacting, data layering, tracking and attribution, and not just buying ratings points at the lowest possible CPP.  Then, in a brilliant move, the Buying (or Investment) arm is integrated with Planning so buyers get planning experience to help them understand how the whole campaign works to meet client KPIs.  I’m not sure if this new approach will save media buying jobs from the dust bins of history, but it’s a novel approach that appears to be paying off at VaynerMedia.

Have a great Wednesday guys!